State-backed Bank of China Hong Kong (BoCHK) sold the so-called additional tier 1 (AT1) bonds late on Tuesday, in a deal exceeding both price and size expectations.

The AT1 bonds are a key part of regulators' post-financial crisis armoury because they allow for debt to be converted into equity when a bank's capital falls below a certain level - imposing the loss on investors instead of taxpayers.

Bank of China Hong Kong's sale drew over $5.4 billion in final orders, according to IFR, a Thomson Reuters publication,

The strong investor interest led to the deal size being raised to $3 billion from the original $1.5 billion-$2 billion, IFR said.

BoCHK's deal was the largest dollar-denominated AT1 bond in Asia, and the largest such bond globally so far this year.

The bonds were priced to yield 5.90 percent, less than the initial expectation of 6.30 percent.